On the heels of its announcement that as much as 85% of its workforce here could be severed in a restructuring exercise, Guyana Goldfields yesterday announced that it has received an unsolicited proposal from fellow Canadian miner Gran Colombia and this will be reviewed by the board to determine if it is superior to one from silver company, Silvercorp.
In a statement yesterday, Guyana Goldfields Inc acknowledged that it had received an unsolicited proposal from Gran Colombia Gold Corp. to acquire all of the issued and outstanding common shares of the Company at a share exchange ratio of 0.142 Gran Colombia shares for each Guyana Goldfields share. The statement said that the Gran Colombia Proposal, which was announced yesterday by Gran Colombia, is conditional upon the completion of Gran Colombia’s proposed concurrent acquisition of Gold X Mining Corp. The latter is a Canadian junior mining company currently moving toward a feasibility study for its multi-million ounce Toroparu Project in western Guyana.
The statement noted that on April 27, 2020, Guyana Goldfields and Silvercorp Metals Inc. announced a definitive agreement pursuant to which Silvercorp has agreed to acquire all of the issued and outstanding shares of Guyana Goldfields via a plan of arrangement under the Canada Business Corporations Act.
Under the terms of this transaction, each holder of Guyana Goldfields shares will have the option to receive, for every Guyana Goldfields share held, C$0.60 in cash or 0.1195 of a Silvercorp common share (valued at C$0.60 based on the volume weighted average price for Silvercorp common shares for the 20 trading days ended April 24, 2020), subject to a maximum cash consideration of C$33.2 million. The statement said that if all Guyana Goldfields shareholders elect to receive cash, consideration for each share will comprise of C$0.20 in cash and 0.0796 of a Silvercorp common share (valued at C$0.40 based on the volume weighted average price for Silvercorp common shares for the 20 trading days ended April 24, 2020).
“The Company’s board of directors (the “Board”), in consultation with its legal counsel and financial advisors, is reviewing the Gran Colombia Proposal to determine if it constitutes a “Superior Proposal” as defined in the Arrangement Agreement (with Silvercorp). The Board will provide an update to shareholders regarding its determination in due course and does not intend to provide further updates or comments with respect to the foregoing except as required by the terms of the Arrangement Agreement or by law”, the statement said.
The statement added that the agreement with Silvercorp remains in effect and the Board has not changed its recommendation in support of the transaction with the company which mines silver in China.
“There can be no assurance that the Gran Colombia Proposal will result in termination of the Arrangement Agreement and the execution of a definitive agreement with Gran Colombia”, the statement added.
Guyana Goldfields said that shareholders who have questions regarding the agreement with Silvercorp should contact the Company’s strategic shareholder advisor and proxy solicitation agent Kingsdale Advisors at 1-800-775-1986, or collect call outside North America at 416-867-2272, or by e-mail at contactus@kingsdaleadvisors.com.
On its website, Gran Colombia is described as a Canadian-based mid-tier gold producer with its primary focus in Colombia where it is currently the largest underground gold and silver producer with several mines in operation at its Segovia Operations. Gran Colombia says it is focused on exploration, expansion and modernization activities at its flagship high-grade Segovia Operations.